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Item 2. Management’s Discussion and Analysis

2021-05-05 compared with 2020-11-10 · 360 added, 533 removed, 81 unchanged (92% of the section changed)

MANAGEMENT’S DISCUSSION

AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read

in conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report

on Form 10-Q, and our audited consolidated financial statements and notes thereto for the year ended December 31, 2019 included

in our 2019 Form 10-K.

This discussion contains forward-looking statements reflecting our current expectations that involve risks

and uncertainties.

See “Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and

assumptions associated with these statements.

Our actual results and the timing of events could differ materially from those expressed

or implied by the forward-looking statements due to important factors and risks including, but not limited to, those set forth

below under “Risk Factors” and elsewhere herein, and those identified under Part I, Item 1A of our 2019 Form 10-K.

All share and per share numbers set forth in this Management’s Discussion and Analysis of Financial Conditions and Results

of Operations reflect the one-for-thirty five reverse stock split effected August 10, 2018.

We are a diversified clinical-stage company

developing therapeutics designed to treat gastrointestinal (GI) diseases in areas of high unmet need.

Our lead clinical development

candidates are:

(1) SYN-004 (ribaxamase) which is designed to degrade certain commonly used intravenous (IV) beta-lactam antibiotics

within the GI tract to prevent microbiome damage, Clostridioides difficile infection (CDI), overgrowth of pathogenic organisms,

the emergence of antimicrobial resistance (AMR), and acute graft-versus-host-disease (aGVHD) in allogeneic hematopoietic cell transplant

(HCT) recipients, and (2) SYN-020, a recombinant oral formulation of the enzyme intestinal alkaline phosphatase (IAP) produced

under cGMP conditions and intended to treat both local GI and systemic diseases.

We were also developing SYN-010 to reduce

the impact of methane-producing organisms in the gut microbiome to treat an underlying cause of irritable bowel syndrome with constipation

On September 30, 2020, Cedars Sinai Medical Center’s (CSMC) (the Company’s SYN-010 clinical development partner)

informed the Company that it agreed to discontinue the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 in IBS-C

Based on the results of a planned interim futility analysis, it was concluded that although SYN-010 was well tolerated,

it was unlikely to meet its primary endpoint by the time enrollment is completed.

As a result of the decision to discontinue

the ongoing Phase 2b investigator-sponsored clinical study of SYN-010, we plan to explore and evaluate a range of strategic options,

which may include:

MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion should be read in

conjunction with our unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form

10-Q, and our audited consolidated financial statements and notes thereto for the year ended December 31, 2020 included in our 2020 Form

This discussion contains forward-looking statements reflecting our current expectations that involve risks and uncertainties.

“Note Regarding Forward-Looking Statements” for a discussion of the uncertainties, risks and assumptions associated with these

Our actual results and the timing of events could differ materially from those expressed or implied by the forward-looking

statements due to important factors and risks including, but not limited to, those set forth below under “Risk Factors” and

elsewhere herein, and those identified under Part I, Item 1A of our 2020 Form 10-K.

We are a diversified clinical-stage company developing

therapeutics designed to treat gastrointestinal (GI) diseases in areas of high unmet need.

Our lead clinical development candidates are:

(1) SYN-004 (ribaxamase) which is designed to degrade certain commonly used intravenous (IV) beta-lactam antibiotics within

the GI tract to prevent microbiome damage, Clostridioides difficile infection (CDI), overgrowth of pathogenic organisms, the emergence

of antimicrobial resistance (AMR), and acute graft-versus-host-disease (aGVHD) in allogeneic hematopoietic cell transplant (HCT) recipients,

and (2) SYN-020, a recombinant oral formulation of the enzyme intestinal alkaline phosphatase (IAP) produced under cGMP conditions

and intended to treat both local GI and systemic diseases.

We plan to explore and evaluate a range of strategic

options, which may include:

in-licensing opportunities;

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or other potential strategic transactions.

In the meantime, we remain focused on working with our clinical development partners to advance the planned Phase 1b/2a clinical

trial of SYN-004 (ribaxamase) in allogeneic hematopoietic cell transplant (HCT) patients, and advancing the clinical development

program for SYN-020 intestinal alkaline phosphatase (IAP) in multiple potential indications.

Both of these programs are unrelated

to SYN-010, and therefore, we remain encouraged by the outlook and potential for these programs in addressing large, underserved

We are in close contact with our clinical

sites and are assessing the impact of COVID-19 on our studies and current timelines and costs.

To maximize patient

participation and safeguard the trials integrity and patient safety, initiation of the Company’s Phase 1b/2a clinical

study of SYN-004 to be conducted by Washington University in Allogeneic HCT Recipients is deferred until Q1 2021, pandemic conditions

If the COVID-19 pandemic continues and persists for an extended period of time, we could experience significant disruptions

to our clinical development timeline, which would adversely affect our business, financial condition, results of operations and

growth prospects.

In response to the spread of COVID-19 as

well as public health directives and orders, we have implemented a number of measures designed to ensure employee safety and business

We have limited access to our offices and are allowing our administrative employees to continue their work outside

of our offices in order to support the community efforts to reduce the transmission of COVID-19 and protect employees, complying

with guidance from federal, state and local government and health authorities.

The effects of the governmental orders and our work-from-home

policies may negatively impact productivity, disrupt our business and delay our clinical programs and timelines, the magnitude

of which will depend, in part, on the length and severity of the restrictions and other limitations on our ability to conduct our

business in the ordinary course.

In the meantime, we remain focused on working with our clinical development partners to advance the planned Phase 1b/2a clinical trial

of SYN-004 (ribaxamase) in allogeneic hematopoietic cell transplant (HCT) patients, and advancing the clinical development program for

SYN-020 intestinal alkaline phosphatase (IAP) in multiple potential indications.

We are continuing to assess the potential impact

of the COVID-19 pandemic.

We are in close contact with our clinical development partners in order to assess the impact of COVID-19

on our studies and current timelines and costs.

While we currently do not anticipate any interruptions in our operations due to COVID-19,

it is possible that if the COVID-19 pandemic persists for an extended period of time, we could experience significant disruptions to our

clinical development timelines due to the COVID-19 pandemic, which would adversely affect our business, financial condition, results of

operations and growth prospects.

In response to the spread of COVID-19 as well

as public health directives and orders, we have implemented a number of measures designed to ensure employee safety and business continuity.

We have limited access to our offices and are allowing our administrative employees to continue their work outside of our offices in order

to support the community efforts to reduce the transmission of COVID-19 and protect employees, complying with guidance from federal, state

and local government and health authorities.

The full extent to which the COVID-19 outbreak will directly or indirectly impact our business,

results of operations and financial condition will depend on future developments that are highly uncertain and cannot be accurately predicted.

The effects of the governmental orders and our work-from-home policies may negatively impact productivity, disrupt our business and delay

our clinical programs and timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other

limitations on our ability to conduct our business in the ordinary course.

Our Product Pipeline:

*Based on management’s current beliefs

and expectations

aGVHD acute graft-vs-host disease;

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SAD single ascending dose

¹Additional products with preclinical

proof-of-concept include SYN-006 (carbapenemase) to prevent aGVHD and infection by vancomycin resistant enterococci and SYN-007

(ribaxamase) DR to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.

¹Additional products with preclinical proof-of-concept

include SYN-006 (carbapenemase) to prevent aGVHD and infection by carbapenem resistant enterococci and SYN-007 (ribaxamase) DR to prevent

antibiotic associated diarrhea with oral β-lactam antibiotics.

²Dependent on funding/partnership.

³Announced option-license agreement

with Massachusetts General Hospital to develop SYN-020 in several potential indications related to inflammation and gut barrier

*Based on management’s current beliefs

and expectations.

Summary of Current Clinical and Preclinical Programs

³Announced option-license agreement with

Massachusetts General Hospital to develop SYN-020 in several potential indications related to inflammation and gut barrier dysfunction.

Additional pipeline products with preclinical

proof-of-concept include SYN-006 (carbapenemase) being designed to prevent aGVHD, microbiome damage and infection due to treatment with

carbapenem antibiotics, and SYN-007 (ribaxamase) DR being designed to prevent antibiotic associated diarrhea with oral β-lactam antibiotics.

Summary of Clinical and Preclinical Programs

Therapeutic Area

Developments & Milestones

Current Status

Prevention of microbiome damage, CDI, overgrowth of pathogenic organisms, AMR, and aGVHD in allogeneic HCT recipients (Degrade IV beta-lactam antibiotics)

(oral enzyme)

outcomes from End of Phase 2 meeting, including FDA-proposed criteria for Phase 3 clinical efficacy and safety which, if achieved,

may support submission for marketing approval on the basis of a single Phase 3 clinical trial (Q4 2018)

initiation of the Phase 3 clinical program proposed by the FDA for the prevention of CDI only after securing additional potential

funding via a strategic partnership

market/potential partner needs and identified potential additional indications in specialty patient populations such as allogeneic

hematopoietic cell transplant patients

clinical trial agreement (CTA) with Washington University School of Medicine to conduct a Phase 1b/2a clinical trial to evaluate

safety, tolerability and pharmacokinetics in up to 36 evaluable adult allogeneic HCT recipients (Q3 2019)

outcomes from End of Phase 2 meeting, including Food and Drug Administration (FDA)-proposed criteria for Phase 3 clinical efficacy and

safety which, if achieved, may support submission for marketing approval on the basis of a single Phase 3 clinical trial (Q4 2018)

market/potential partner needs and identified potential additional indications in specialty patient populations such as allogeneic hematopoietic

cell transplant (HCT) patients

clinical trial agreement (CTA) with Washington University School of Medicine to conduct a Phase 1b/2a clinical trial to evaluate safety,

tolerability and pharmacokinetics in up to 36 evaluable adult allogeneic HCT recipients (Q3 2019)

official meeting minutes from FDA Type-C meeting held on December 2, 2019 to discuss development in allogeneic HCT recipients who

are administered IV beta-lactam antibiotics in response to fever (Q1 2020)

written notification from the FDA informing the Company that the FDA determined the Phase 1b/2a clinical program in adult allogeneic

hematopoietic cell transplant (HCT) recipients may proceed per the submitted clinical program protocol (Q3 2020)

Proposed Phase 1b/2a clinical trial to be conducted by Washington University in adult allogeneic HCT is anticipated

to commence during Q1 2021, subject to COVID-19 global pandemic

Treatment of IBS-C

(oral modified-release

lovastatin lactone)

key elements of Pivotal Phase 2b/3 clinical trial design pursuant to consultations with FDA (Q1 2017)

into agreement with CSMC for an investigator-sponsored Phase 2b clinical study of SYN-010 to evaluate SYN-010 dose response and

inform Phase 3 clinical development (Q3 2018)

recruitment and enrollment in the Phase 2b investigator-sponsored clinical study recommenced following a temporary halt in Q1 and

Q2 due to the COVID-19 global pandemic (Q3 2020)

Announced results from a planned interim futility analysis which concluded that although SYN-010 was well-tolerated, it

was unlikely to meet its primary objective by the time enrollment is completed.

As a result, CSMC has agreed to discontinue the

trial and will conduct a comprehensive review of the final data set and publish its findings (Q3 2020)

written notification from the FDA informing the Company that the FDA determined the Phase 1b/2a clinical program in adult allogeneic hematopoietic

cell transplant (HCT) recipients may proceed per the submitted clinical program protocol (Q3 2020)

University began enrollment and the first patient was dosed in the first of three antibiotic cohorts for the Phase 1b/2a clinical trial

of SYN-004 in adult HCT recipients (Q2 2021)

Preserve gut barrier, treat local GI inflammation, and restore gut microbiome

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high expressing manufacturing cell lines for intestinal alkaline phosphatase (IAP) (1H 2017)

basic drug supply manufacturing process and potential tablet and capsule formulations (2H 2017)

basic Drug Supply manufacturing process and potential tablet formulation (2H 2017)

potential clinical indications with unmet medical need including enterocolitis associated with radiation therapy for cancer (Q1 2019)

1 unchanged sentence

requirements (Q2 2019)

Entered into an agreement with Massachusetts General Hospital (“MGH”) granting the Company an option for an exclusive

license to intellectual property and technology related to the use of IAP to maintain GI and microbiome health, diminish systemic

inflammation, and treat age-related diseases (Q2 2020)

into an agreement with Massachusetts General Hospital (“MGH”) granting the Company an option for an exclusive license to intellectual

property and technology related to the use of IAP to maintain GI and microbiome health, diminish systemic inflammation, and treat age-related

diseases (Q2 2020)

IND application with U.S.

1 unchanged sentence

therapy (Q2 2020)

Received study-may-proceed letter from U.S.

FDA to conduct a Phase 1 single ascending dose study in healthy volunteers, designed

to evaluate SYN-020 for safety, tolerability, and pharmacokinetic parameters (Q3 2020)

study-may-proceed letter from U.S.

FDA to conduct a Phase 1 single ascending dose study in healthy volunteers, designed to evaluate SYN-020

for safety, tolerability, and pharmacokinetic parameters (Q3 2020)

Announced enrollment commenced and

three out of a total of four cohorts have been dosed in a Phase 1a single-ascending-dose (SAD) study of SYN-020 (Q2 2021).

Prevention of CDI, overgrowth of pathogenic organisms and AMR (Degrade IV carbapenem antibiotics)

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microbiome protection in a pig model of ertapenem administration (Q1 2018)

supporting data demonstrating SYN-006 attenuated emergence of antibiotic resistance genes in a pig model, including those encoding

beta-lactamases and genes conferring resistance to a broad range of antibiotics such as aminoglycosides and macrolides (Q1 2019)

Prevention of CDI, overgrowth of pathogenic organisms and AMR (Degrade oral beta-lactam antibiotics)

supporting data demonstrating SYN-006 attenuated emergence of antibiotic resistance in a pig model, including encoded beta-lactamases

and genes conferring resistance to a broad range of antibiotics such as aminoglycosides and macrolides (Q1 2019)

Prevention of antibiotic-associated diarrhea (AAD), overgrowth of pathogenic

organisms and AMR (Degrade oral beta-lactam antibiotics)

(oral enzyme)

work ongoing to expand the utility of SYN-004 (ribaxamase) for use with oral beta-lactam antibiotics

supportive data from a second canine animal model demonstrating that when co-administered with oral amoxicillin and oral Augmentin,

oral SYN-007 did not interfere with systemic absorption of antibiotics but did diminish microbiome damage associated with these

antibiotics (Q2 2018)

Reported supportive data

from a second canine animal model demonstrating that when co-administered with oral Amoxicillin and oral Augmentin (combination amoxicillin/clavulanate),

oral SYN-007 did not interfere with systemic absorption of antibiotics but did diminish microbiome damage associated with these antibiotics

supportive data demonstrating SYN-007 mitigated antibiotic-mediated gut microbiome alterations and maintained gut microbiome integrity

when co-administered with oral amoxicillin in a dose-response canine study (Q2 2019)

supportive data demonstrating SYN-007 protected the gut microbiome of dogs from amoxicillin and the beta-lactam/beta-lactamase

inhibitor combination amoxicillin/clavulanate and also reduced the emergence of antibiotic resistance in a canine study (Q1 2020)

Reported supportive data

demonstrating SYN-007 protected the gut microbiome of dogs from amoxicillin and the beta-lactam/beta-lactamase inhibitor Augmentin and

also reduced the emergence of antibiotic resistance in a canine study (Q1 2020)

Prevention and treatment of pertussis

(monoclonal antibody

supportive preclinical data demonstrating that an extended half-life version of hu1B7, a component of SYN-005, provided protection

from pertussis for five weeks in a neonatal non-human primate study (Q4 2017 )

supportive preclinical data demonstrating that an extended half-life version of hu1B7, a component of SYN-005, provided protection from

pertussis for five weeks in a neonatal non-human primate study (Q4 2017)

Collaboration

with UT Austin

Recent Developments

Our Gastrointestinal (GI) and Microbiome-Focused Pipeline

Our SYN-004 (ribaxamase) and SYN-020 clinical

programs are focused on the gastrointestinal tract (GI) and the gut microbiome, which is home to billions of microbial species

and composed of a natural balance of both “good” beneficial species and potentially “bad” pathogenic species.

When the natural balance or normal function of these microbial species is disrupted, a person’s health can be compromised.

All of our programs are supported by our growing intellectual property portfolio.

We are maintaining and building our patent portfolio

filing new patent applications;

prosecuting existing applications;

and licensing and acquiring new patents and patent

programs are focused on the gastrointestinal tract (GI) and the gut microbiome, which is home to billions of microbial species and composed

of a natural balance of both “good” beneficial species and potentially “bad” pathogenic species.

When the natural

balance or normal function of these microbial species is disrupted, a person’s health can be compromised.

All of our programs are

supported by our growing intellectual property portfolio.

We are maintaining and building our patent portfolio through:

filing new patent

applications;

Recent Developments

prosecuting existing applications;

and licensing and acquiring new patents and patent applications.

Clinical and Pre-Clinical Update

3 unchanged sentences

resistance (AMR) and acute graft-versus-host disease (aGVHD) in allogeneic HCT recipients

Phase 1b/2a Clinical Study in Allogeneic

HCT Recipients

In August 2019, we entered into a Clinical

Trial Agreement (CTA) with the Washington University School of Medicine (Washington University) to conduct a Phase 1b/2a clinical

trial of SYN-004 (ribaxamase).

Under the terms of this agreement, we will serve as the sponsor of the study and supply SYN-004

Phase 1b/2a Clinical Study in Allogeneic HCT

In August 2019, we entered into a Clinical Trial

Agreement (CTA) with the Washington University School of Medicine (Washington University) to conduct a Phase 1b/2a clinical trial of SYN-004

(ribaxamase).

Dubberke, Professor of Medicine and Clinical Director, Transplant Infectious Diseases at Washington University

and a member of the SYN-004 (ribaxamase) steering committee will serve as the principal investigator of the clinical trial in collaboration

with his Washington University colleague Dr.

Schroeder, Associate Professor of Medicine, Division of Oncology, Bone Marrow

Transplantation and Leukemia.

On January 7, 2020, we announced the receipt

of official meeting minutes from the FDA following a Type-C meeting held on December 2, 2019 at our request to discuss the development

of SYN-004 (ribaxamase) for treatment of allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response

Based on the final meeting minutes, the Phase 1b/2a clinical trial will comprise a single center, randomized, double-blinded,

placebo-controlled clinical trial of oral SYN-004 (ribaxamase) in up to 36 evaluable adult allogeneic HCT recipients.

of this study is to evaluate the safety, tolerability and potential absorption into the systemic circulation (if any) of 150 mg

oral SYN-004 (ribaxamase) administered to allogeneic HCT recipients four times per day who receive an IV beta-lactam antibiotic

to treat fever.

Study participants will be enrolled into three sequential cohorts administered a different study-assigned IV beta-lactam

Eight participants in each cohort will receive SYN-004 (ribaxamase) and four will receive placebo.

On July 30, 2020

we received written notification from the FDA informing us that they determined the Phase 1b/2a clinical program in adult allogeneic

HCT recipients may proceed per the submitted clinical program protocol.

Safety and pharmacokinetic data for each

cohort will be reviewed by an independent Data and Safety Monitoring Committee (DSMC), which will make a recommendation on whether

to proceed to the next IV beta-lactam antibiotic.

The clinical trial will also evaluate potential protective effects of SYN-004

(ribaxamase) on the gut microbiome as well as generate preliminary information on potential therapeutic benefits and patient outcomes

of SYN-004 (ribaxamase) in allogeneic HCT recipients.

Due to the unique challenges posed by the

global COVID-19 pandemic, Washington University continues to evaluate non-essential activities, which may have a direct impact

on planned and ongoing clinical trials.

Initiation of the Phase 1b/2a clinical trial remains largely at their discretion and is

contingent upon Washington University’s ability to conduct this clinical program free from the impact of COVID-19, and approval

from their IRB and the FDA.

At this time, we have determined that postponing the initiation of the planned Phase 1b/2a clinical

trial in allogeneic HCT recipients until at least the first quarter of 2021 remains the appropriate course of action in the current

operating environment.

Under the terms of this agreement, we will serve as the sponsor of the study and supply SYN-004 (ribaxamase).

Dubberke, Professor of Medicine and Clinical Director, Transplant Infectious Diseases at Washington University and a member of the SYN-004

(ribaxamase) steering committee will serve as the principal investigator of the clinical trial in collaboration with his Washington University

colleague Dr.

Schroeder, Associate Professor of Medicine, Division of Oncology, Bone Marrow Transplantation and Leukemia.

On January 7, 2020, we announced the receipt of

official meeting minutes from the FDA following a Type-C meeting held on December 2, 2019 at our request to discuss the development of

SYN-004 (ribaxamase) for treatment of allogeneic HCT recipients who are administered IV beta-lactam antibiotics in response to fever.

Based on the final meeting minutes, the Phase 1b/2a clinical trial is a single center, randomized, double-blinded, placebo-controlled

clinical trial of oral SYN-004 (ribaxamase) in up to 36 evaluable adult allogeneic HCT recipients.

The goal of this study is to evaluate

the safety, tolerability and potential absorption into the systemic circulation (if any) of 150 mg oral SYN-004 (ribaxamase) administered

to allogeneic HCT recipients four times per day who receive an IV beta-lactam antibiotic to treat fever.

Study participants are being

enrolled into three sequential cohorts administered a different study-assigned IV beta-lactam antibiotic.

Eight participants in each cohort

will receive SYN-004 (ribaxamase) and four will receive placebo.

Safety and pharmacokinetic data for each cohort

will be reviewed by an independent Data and Safety Monitoring Committee, which will make a recommendation on whether to proceed to the

next IV beta-lactam antibiotic.

The clinical trial will also evaluate potential protective effects of SYN-004 (ribaxamase) on the gut

microbiome as well as generate preliminary information on potential therapeutic benefits and patient outcomes of SYN-004 (ribaxamase)

in allogeneic HCT recipients.

On July 30, 2020, we received written

notification from the FDA informing us that they determined the Phase 1b/2a clinical program in adult allogeneic HCT recipients may

proceed per the submitted clinical program protocol.

On December 22, 2020, we announced we received approval from the

Institutional Review Board (IRB) at Washington University to commence the Phase 1b/2a clinical trial of SYN-004.

On April 14, 2021

we announced that enrollment has commenced and the first patient of the first antibiotic cohort of this study had been dosed.

enrollment proceeds as planned, a data readout for the first cohort is anticipated in Q4 2021.

Due to the unique challenges posed by the global

COVID-19 pandemic, Washington University continues to evaluate non-essential activities which may have a direct impact on planned and

ongoing clinical trials.

Continuation of the Phase 1b/2a clinical trial including, but not limited to, the enrollment of new patients

remains largely at the discretion of Washington University and is contingent upon their ability to conduct this clinical program free

from the impact of COVID-19.

We remain in close contact with Washington University and are actively monitoring the crisis caused by the

spread of COVID-19 and its impact to the clinical development plans for our SYN-004 (ribaxamase) program.

SYN-010 — Treatment

of Irritable Bowel Syndrome with Constipation (IBS-C)

On September 5, 2018, we entered into an

agreement with CSMC for an investigator-sponsored Phase 2b clinical study of SYN-010 to be co-funded by us and CSMC.

2b study was being conducted out of the Medically Associated Science and Technology (MAST) Program at CSMC and was a 12-week, placebo-controlled,

double-blind, randomized clinical trial to evaluate two dose strengths of oral SYN-010 21 mg and 42 mg in as many as 150 patients

diagnosed with IBS-C using a breath methane screening level as a criterion for patient enrollment.

The primary objective for the study

was to determine the efficacy of SYN-010, measured as an improvement from baseline in the weekly average number of complete

spontaneous bowel movements (CSBMs) during the 12-week treatment period for SYN-010 21 mg and 42 mg daily doses relative to

Secondary efficacy endpoints for both dose strengths of SYN-010 were intended measure changes from baseline in

abdominal pain, bloating, stool frequency as well as the use of rescue medication relative to placebo.

Exploratory outcomes

included Adequate Relief and quality of life measures using the well-validated EQ-5D-5L and PAC-SYM patient questionnaires.

Importantly, this study was intended to generate a comprehensive and meaningful data set to provide additional insights and

address specific queries into potential SYN-010 clinical efficacy, including dose response, length of treatment and

microbiome effects, intended to be evaluated in the FDA-agreed Phase 2b/3 adaptive design clinical program.

Enrollment in this study commenced in January

2019 and was temporarily halted during the first and second quarter of 2020 due to the unique challenges posed by the global COVID-19

pandemic which required CSMC to temporarily limit all non-essential activities, directly impacting their ability to actively recruit

and screen new patients.

During this time, active study participants who did not complete the study prior to the decision to halt

all non-essential activities were given the opportunity to complete the study as CSMC took steps to ensure data from this group

was collected in accordance with the clinical trial protocol.

During the third quarter of 2020, a planned

interim futility analysis of the Phase 2b investigator-sponsored clinical study was completed.

Based on the review of the interim

analysis, it was concluded that although SYN-010 was well-tolerated, it failed to meet the prespecified efficacy criteria and was

unlikely to meet the primary objective of the study by the time enrollment is completed.

On September 30, 2020 CSMC formally agreed

to discontinue the study.

CSMC has been unblinded and intends to conduct a comprehensive review of the data set and publish its

SYN-020 — Oral Intestinal

Alkaline Phosphatase

SYN-020 is a quality-controlled, recombinant

version of bovine Intestinal Alkaline Phosphatase (IAP) produced under cGMP conditions and formulated for oral delivery.

The published

literature indicates that IAP functions to diminish GI inflammation, tighten the gut barrier to diminish “leaky gut,”

promote a healthy microbiome, and diminish GI and systemic inflammation.

Based on these known mechanisms as well as our own supporting

animal model data, we are initially developing SYN-020 to mitigate the intestinal damage caused by radiation therapy that is routinely

used to treat pelvic cancers, including the treatment and prevention of radiation enteropathy secondary to cancer therapy.

its broad therapeutic potential, a key hurdle to commercialization has been the high cost of IAP manufacture which is commercially

available for as much as $10,000 per gram.

We believe we have developed technologies to traverse this hurdle and now have the ability

to produce more than 3 grams per liter of SYN-020 for roughly a few hundred dollars per gram at commercial scale.

On June 30, 2020, we submitted an Investigational

New Drug (IND) application to the FDA in support of an initial indication for the treatment of radiation enteropathy secondary

to pelvic cancer therapy.

On July 30, 2020 we announced that we received a study-may-proceed letter from the FDA to conduct a Phase

1 single ascending dose study in healthy volunteers designed to evaluate SYN-020 for safety, tolerability and pharmacokinetic parameters.

The Phase 1 clinical program is anticipated to commence during the first quarter of 2021 and is intended to support the clinical

development of SYN-020 for multiple indications.

During the second quarter of 2020, we also

announced that we entered into an agreement with Massachusetts General Hospital (“MGH”) granting us an option for an

exclusive license to intellectual property and technology related to the use of IAP to maintain GI and microbiome health, diminish

systemic inflammation, and treat age-related diseases.

Research published by a team of investigators led by Richard Hodin, MD,

Chief of the Massachusetts General Hospital Division of General and Gastrointestinal Surgery and Professor of Surgery, Harvard

Medical School, evaluated long-term oral supplementation of IAP, including SYN-020, in mice.

Hodin’s research demonstrated

that IAP administration, starting at 10 months of age, slowed the microbiome changes, gut-barrier dysfunction, and gastrointestinal

and systemic inflammation that normally accompany aging.

Additionally, the IAP administration resulted in improved metabolic profiles

in the aged mice, diminished frailty, and extended lifespan.

Under the terms of the agreement, we are granted exclusive rights

to negotiate a worldwide license with MGH to commercially develop SYN-020 to treat and prevent metabolic and inflammatory diseases

associated with aging.

If executed, we plan to use this license in the advancement of an expanded clinical development program

In addition, we continue to explore and evaluate potential future indications that have been associated with decreased

IAP expression and intestinal barrier dysfunction.

Such potential indications include inflammatory bowel disease (IBD) and celiac

disease, as well as metabolic syndrome and associated non-alcoholic fatty liver-disease (NAFLD).

SYN-020 is a quality-controlled, recombinant version

of bovine Intestinal Alkaline Phosphatase (IAP) produced under cGMP conditions and formulated for oral delivery.

The published literature

indicates that IAP functions to diminish GI inflammation, tighten the gut barrier to diminish “leaky gut,”

promote a healthy

microbiome, and diminish GI and systemic inflammation.

Despite its broad therapeutic potential, a key hurdle to commercialization has

been the high cost of IAP manufacture which is commercially available for as much as $10,000 per gram.

We believe we have developed technologies

to traverse this hurdle and now have the ability to produce more than 3 grams per liter of SYN-020 for roughly a few hundred dollars per

gram at commercial scale.

Based on the known mechanisms as well as our own supporting animal model data, we intended to initially develop

SYN-020 to mitigate the intestinal damage caused by radiation therapy that is routinely used to treat pelvic cancers.

And, while we believe

SYN-020 may play a pivotal role in addressing acute and long-term complications associated with radiation exposure to the GI tract, we

have begun planning to develop SYN-020 in indications that may offer a more accelerated or streamlined pathway to registration while also

addressing significant unmet medical needs.

Such indications include celiac disease, non-alcoholic fatty liver disease (“NAFLD”),

and indications to treat and prevent metabolic and inflammatory disorders associated with aging which are supported by our collaboration

with Massachusetts General Hospital (“MGH”).

Across the six major markets, the total prevalent cases of celiac disease are

expected to increase from 5.8 million cases in 2013 to an expected 8.1 million cases in 2023, representing an annual growth rate of approximately

During the same period, prevalent cases in the U.S.

are expected to increase from 2.8 million in 2013 to an expected 4.3 million in

2023, representing a significant market opportunity.

During the second quarter of 2020, we announced

that we entered into an agreement with Massachusetts General Hospital granting us an option for an exclusive license to intellectual property

and technology related to the use of IAP to maintain GI and microbiome health, diminish systemic inflammation, and treat age-related diseases.

Research published by a team of investigators led by Richard Hodin, MD, Chief of the Massachusetts General Hospital Division of General

and Gastrointestinal Surgery and Professor of Surgery, Harvard Medical School, evaluated long-term oral supplementation of IAP, including

SYN-020, in mice.

Hodin’s research demonstrated that IAP administration, starting at 10 months of age, slowed the microbiome

changes, gut-barrier dysfunction, and gastrointestinal and systemic inflammation that normally accompany aging.

Additionally, the IAP

administration resulted in improved metabolic profiles in the aged mice, diminished frailty, and extended lifespan.

Under the terms of

the agreement, we are granted exclusive rights to negotiate a worldwide license with MGH to commercially develop SYN-020 to treat and

prevent metabolic and inflammatory diseases associated with aging.

If executed, we plan to use this license in the advancement of an expanded

clinical development program for SYN-020.

On June 30, 2020, we submitted an IND application

to the FDA in support of an initial indication for the treatment of radiation enteropathy secondary to pelvic cancer therapy.

2020, we announced that we received a study-may-proceed letter from the FDA to conduct a Phase 1a single-ascending-dose (“SAD”)

study in healthy volunteers designed to evaluate SYN-020 for safety, tolerability and pharmacokinetic parameters.

On April 1, 2021, we

announced that enrollment had commenced and three out of a total of four cohorts have been dosed in the Phase 1a SAD clinical trial of

In all, twenty-four healthy adult volunteers will be enrolled, all of which will receive oral SYN-020.

A topline data announcement

from this clinical trial is expected during the third quarter of 2021.

Planning for a second Phase 1a study evaluating multiple-ascending

doses (“MAD”) of SYN-020 is also underway and anticipated to commence during the third quarter of 2021.

A topline data readout

of the Phase 1a MAD clinical study is anticipated during the first quarter of 2022, pandemic conditions permitting.

Following the completion

of Phase 1 safety studies, we may consider conducting a placebo-controlled Phase 1b/2a gluten challenge study in as many as 40 celiac

patients who present with predominantly GI symptoms followed by a Phase 2b proof-of-concept clinical trial in a similar patient population.

We may also seek to initiate clinical trials of SYN-020 evaluating its potential therapeutic benefit in NAFLD patients.

Intellectual Property

All of our programs are supported by growing

patent estates that we either own or exclusively license.

Each potential product has issued patents that provide protection.

total, we have over 110 U.S.

All of our programs are supported by growing patent

In total, we have over 80 U.S.

and foreign patents and over 65 U.S.

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patents and foreign patents (in most major markets, e.g.

Europe (including Germany, Great Britain and France), Japan, China and Canada, among others) and U.S.

and foreign patents pending

in most major markets, e.g.

Europe (including Germany, Great Britain and France), Japan, China and Canada, among others).

For instance,

8,894,994 and 9,587,234, which include claims to compositions of matter and pharmaceutical compositions of beta-lactamases,

including SYN-004 (ribaxamase), have patent terms to at least 2031.

Further, U.S.

Patent 9,301,995 and 9,301,996, both of which

will expire in 2031, cover various uses of beta-lactamases, including SYN-004 (ribaxamase), in protecting the microbiome, and U.S.

9,290,754, 9,376,673, 9,404,103, 9,464,280, and 9,695,409 which will expire in at least 2035, covers further beta-lactamase

compositions of matter related to SYN-004 (ribaxamase).

The SYN-010 program is supported by IP that is exclusively licensed to

(and, in some cases co-owned by) Synthetic Biologics, namely U.S.

patents and foreign patents (in most major markets, e.g.

(including Germany, Great Britain and France), and Canada, among others) and U.S.

and foreign patents pending in most major markets,

(including Germany, Great Britain and France), Japan, China and Canada, among others) and U.S.

and foreign patents pending in most major

markets, e.g.

Europe (including Germany, Great Britain and France), Japan, China and Canada, among others).

For instance, U.S.

9,192,618, which expires in at least 2023, includes claims that cover use of statins, including SYN-010, for the treatment of IBS-C.

9,289,418, which expires in at least 2033, includes claims that cover the use of a variety of compounds, including

the active agent of SYN-010, to treat constipation in certain screened patients.

9,744,208 covers methods of use

of the active agent of SYN-010 for the treatment of constipation until at least 2034.

9,956,292 includes claims

related to composition of matter of anti-methanogenic compositions that find use in treating IBS-C and will expire in at least

8,894,994 and 9,587,234, which include claims to compositions of matter and pharmaceutical compositions of beta-lactamases, including

SYN-004 (ribaxamase), have patent terms to at least 2031.

Further, U.S.

10,328,151, covers the composition of matter of the SYN-010

clinical agent and U.S.

Patent 10,519,515 covers methods of treating IBS-C

with a statin, inclusive of SYN-010, in a selected patient population.

Patent 9,301,995 and 9,301,996, both of which will expire in 2031,

cover various uses of beta-lactamases, including SYN-004 (ribaxamase), in protecting the microbiome, and U.S.

9,290,754, 9,376,673,

9,404,103, 9,464,280, and 9,695,409 which will expire in at least 2035, covers further beta-lactamase compositions of matter related to

SYN-004 (ribaxamase).

The SYN-020 (oral intestinal alkaline phosphatase

(IAP)) program is supported by IP that is assigned to Synthetic Biologics, namely U.S.

and foreign patent applications (in many major

markets, e.g.

Europe, Canada, and Australia).

These patent applications, which cover various formulations, medical uses and manufacture

of SYN-020, are expected to expire in 2038-2040, if granted, and without taking potential patent term extensions or patent term adjustment

into account.

Our goal is to (i) obtain, maintain, and

enforce patent protection for our products, formulations, processes, methods, and other proprietary technologies, (ii) preserve

our trade secrets, and (iii) operate without infringing on the proprietary rights of other parties worldwide.

enforce patent protection for our products, formulations, processes, methods, and other proprietary technologies, (ii) preserve our

trade secrets, and (iii) operate without infringing on the proprietary rights of other parties worldwide.

We seek, where appropriate,

the broadest intellectual property protection for product candidates, proprietary information, and proprietary technology through

a combination of contractual arrangements and patents.

the broadest intellectual property protection for product candidates, proprietary information, and proprietary technology through a combination

of contractual arrangements and patents.

Critical Accounting Policies

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are prepared in conformity with U.S.

GAAP, which requires the use of estimates, judgments and assumptions that affect the reported

amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial

statements, and the reported amounts of revenues and expenses in the periods presented.

We believe that the accounting estimates

employed are appropriate and resulting balances are reasonable;

however, due to inherent uncertainties in making estimates, actual

results may differ from the original estimates, requiring adjustments to these balances in future periods.

The critical accounting

estimates that affect the condensed consolidated financial statements and the judgments and assumptions used are consistent with

those described under Part II, Item 7 of our 2019 Form 10-K.

GAAP, which requires the use of estimates, judgments and assumptions that affect the reported amounts

of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements,

and the reported amounts of revenues and expenses in the periods presented.

We believe that the accounting estimates employed are appropriate

and resulting balances are reasonable;

however, due to inherent uncertainties in making estimates, actual results may differ from the

original estimates, requiring adjustments to these balances in future periods.

The critical accounting estimates that affect the condensed

consolidated financial statements and the judgments and assumptions used are consistent with those described under Part II, Item 7 of

our 2020 Form 10-K.

Results of Operations

Three Months Ended September 30,

2020 and 2019

Three Months Ended March 31, 2021 and 2020

General and Administrative Expenses

General and administrative expenses increased

by 9% to $1.2 million for the three months ended September 30, 2020, from $1.1 million for the three months ended September 30,

This increase is primarily due to increased insurance costs and stock registration fees, offset by a decrease in legal

The charge related to stock-based compensation expense was $67,000 for the three months ended September 30, 2020, compared

to $68,000 the three months ended September 30, 2019.

by 2% to approximately $1.42 million for the three months ended March 31, 2021, from approximately $1.39 million for the three months

ended March 31, 2020.

This increase is primarily due to higher insurance costs, audit fees, and legal costs offset by a reduction

in patent related legal fees, consulting fees and travel expense.

The charge related to stock-based compensation expense was $82,000 for

the three months ended March 31, 2021, compared to $65,000 the three months ended March 31, 2020.

Research and Development Expenses

Research and development expenses decreased

by 78% to $0.9 million for the three months ended September 30, 2020, from $4.1 million for the three months ended September 30,

This decrease is primarily the result of the response to the global COVID-19 pandemic by our clinical development partners

which led to the postponement of the Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients as well as

the discontinuation of the Phase 2b investigator sponsored clinical trial of SYN-010.

The charge related to stock-based compensation

expense was $15,000 for the three months ended September 30, 2020, compared to $23,000 for the three months ended September 30,

The following table sets forth our research

and development expenses directly related to our therapeutic areas for the three months ended September 30, 2020 and 2019.

direct expenses were external costs associated with preclinical studies and clinical trials.

Indirect research and development

expenses related to employee costs, facilities, stock-based compensation and research and development support services that are

not directly allocated to specific drug candidates.

Therapeutic Areas (in thousands)

September 30,

SYN-004 (ribaxamase

Research and development expenses decreased by

32% to approximately $1.1 million for the three months ended March 31, 2021, from approximately $1.6 million for the three months ended

March 31, 2020.

This decrease is primarily the result of lower indirect program costs for the three months ended March 31, 2021, including

salary and related expense reductions, a decrease in manufacturing costs for SYN-020 and market research.

In addition, as a result of

the global COVID-19 pandemic, our clinical development partner (Washington University) reduced their operating capacity during 2021 to

include only essential activities as part of their pandemic response, which delayed the start of our clinical trial, resulting in lower

clinical trial expenses for the quarter.

The research and development costs incurred during the quarter were primarily related to our

Phase 1a clinical trial of SYN-020 and the Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients.

We anticipate

research and development expense to increase as our ongoing clinical trials continue to enroll patients.

The charge related

to stock-based compensation expense was $19,000 for the three months ended March 31, 2021, compared to $18,000 related to stock-based

compensation expense for the three months ended March 31, 2020.

The following table sets forth our research and

development expenses directly related to our therapeutic areas for the three months ended March 31, 2021 and 2020.

These direct expenses

were external costs associated with preclinical studies and clinical trials.

Indirect research and development expenses related to employee

costs, facilities, stock-based compensation and research and development support services that are not directly allocated to specific

drug candidates.

Therapeutic Areas

Total direct costs

Total indirect costs

Total Research and Development

Other Income/Expense

Other income was $134 for the three months

ended September 30, 2020, compared to other income of $92,000 for the three months ended September 30, 2019.

Other income for the

three months ended September 30, 2020 and 2019 is primarily comprised of interest income.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders

was $2.7 million, or $0.14 per basic and dilutive common share for the three months ended September 30, 2020, compared to a net

loss of $5.3 million, or $0.31 per basic common share and dilutive common share for the three months ended September 30, 2019.

Net loss attributable to common stockholders for the three months ended September 30, 2020 excludes net loss attributable to non-controlling

interest of $8,000 and includes the accretion of Series B preferred discount of $519,000 on converted shares and Series A Preferred

Stock accrued dividends of $64,000.

Net loss attributable to common stockholders for the three months ended September 30, 2019

excludes net loss attributable to non-controlling interest of $30,000 and includes the accretion of Series B preferred discount

of $70,000 on converted shares and $63,000 of Series A accrued dividends.

Nine Months Ended September 30, 2020

General and Administrative Expenses

General and administrative expenses increased

by 18% to $3.9 million for the nine months ended September 30, 2020, from $3.3 million for the nine months ended September 30,

This increase is primarily due to increased legal costs related to business development, patent execution, employee

contract matters, vacation expense, insurance costs and registration fees.

The charge related to stock-based compensation expense

was $199,000 for the nine months ended September 30, 2020, compared to $193,000 for the nine months ended September 30, 2019.

Research and Development Expenses

Research and development expenses decreased

by 55% to $4.1 million for the nine months ended September 30, 2020, from $9.2 million for the nine months ended September 30,

This decrease is primarily the result of the response to the global COVID-19 pandemic by our clinical development partners

which led to the postponement of the Phase 1b/2a clinical trial of SYN-004 (ribaxamase) in allogeneic HCT recipients and a temporary

the discontinuation of the Phase 2b investigator sponsored clinical trial of SYN-010.

Research and development expenses also include

a charge relating to stock-based compensation expense of $52,000 for the nine months ended September 30, 2020, compared to $53,000

for the nine months ended September 30, 2019.

The following table sets forth our research

and development expenses directly related to our therapeutic areas for the nine months ended September 30, 2020 and 2019.

direct expenses were external costs associated with preclinical studies and clinical trials.

Indirect research and development

expenses related to employee costs, facilities, stock-based compensation and research and development support services that are

not directly allocated to specific drug candidates.

Therapeutic Areas (in thousands)

September 30,

SYN-004 (ribaxamase)

Other therapeutic areas

Total direct costs

Total indirect costs

Other income was $44,000 for the nine months

ended September 30, 2020, compared to other income of $217,000 for the nine months ended September 30, 2019.

Other income for the

nine months ended September 30, 2020 and 2019 is primarily comprised of interest income.

Other income was $347 for the three months ended

March 31, 2021, compared to other income of $38,000 for the three months ended March 31, 2020.

Other income for the three months ended

March 31, 2021 and 2020 is primarily comprised of interest income.

Net Loss Attributable to Common Stockholders

Our net loss attributable to common stockholders

was $9.4 million, or $0.52 per basic and dilutive common share for the nine months ended September 30, 2020, compared to a net

loss of $12.9 million, or $0.79 per basic common share and dilutive common share for the nine months ended September 30, 2019.

Net loss attributable to common stockholders for the nine months ended September 30, 2020 excludes net loss attributable to non-controlling

interest of $50,000 and includes the accretion of Series B preferred discount of $1.3 million on converted shares and Series A

Preferred Stock accrued dividends of $189,000.

Net loss attributable to common stockholders for the nine months ended September

30, 2019 excludes net loss attributable to non-controlling interest of $73,000 and includes the accretion of Series B preferred

discount of $585,000 on converted shares and $185,000 of Series A accrued dividends.

was approximately $11.5 million, or $0.13 per basic and dilutive common share for the three months ended March 31, 2021, compared to a

net loss of approximately $3.4 million, or $0.20 per basic common share and dilutive common share for the three months ended March 31,

Net loss attributable to common stockholders for the three months ended March 31, 2021 excludes net loss attributable to non-controlling

interest of $1,000 and includes the accretion of the Series B preferred discount of $1.5 million on converted shares, Series A Preferred

Stock accrued dividends of $24,000 and the deemed dividend for the effect of the Series A preferred shares price adjustment of $7.4 million.

Net loss attributable to common stockholders for the three months ended March 31, 2020 excludes net loss attributable to non-controlling

interest of $24,000 and includes the accretion of Series B preferred discount of $404,000 on converted shares and Series A Preferred Stock

accrued dividends of $62,000.

Liquidity and Capital Resources

With the exception of the three months

ended June 30, 2010 and the three months ended December 31, 2017, we have experienced significant losses since inception, incurred

negative cash flows from operations, and have a significant accumulated deficit.

We have incurred an accumulated deficit of $245

million as of September 30, 2020 and expect to continue to incur losses in the foreseeable future.

Our ability to continue as a

going concern is dependent upon our ability to raise additional debt and equity capital.

There can be no assurance that such capital

will be available in sufficient amounts or on terms acceptable to us.

These factors raise substantial doubt about our ability to

continue as a going concern.

We do not have sufficient capital to fund

our operations beyond the next twelve months.

In order to address our capital needs, including our planned clinical trials, we

are actively pursuing additional equity or debt financing in the form of either a private placement or a public offering.

been in ongoing discussions with strategic institutional investors and investment banks with respect to such possible offerings.

Such additional financing opportunities might not be available to us when and if needed, on acceptable terms or at all.

unable to obtain additional financing in sufficient amounts or on acceptable terms under such circumstances, our operating results

and prospects will be adversely affected.

Our cash and cash equivalents totaled $6.0

million as of September 30, 2020, a decrease of $9.0 million from December 31, 2019.

During the three months ended September

30, 2020, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of

$2.1 million for the three months ended September 30, 2020.

With the cash available in early November 2020, we believe these resources

will be sufficient to fund our operations through at least the end of the first quarter of 2021.

As a result of the global COVID-19 pandemic,

management has been able to further extend our cash runway since our clinical development partners CSMC and Washington University)

reduced their operating capacity when necessary during 2020 to include only essential activities, which excluded all planned and

ongoing clinical trials of SYN-004 and SYN-010.

However, this reduction in operating activity has adversely impacted our planned

clinical trial timelines.

We anticipate reduced research and development costs through the end of the year, since we anticipate

that our proposed Phase 1b/2a clinical trial to be conducted by Washington University will be postponed until 2021, subject to

further COVID-19 developments.

On September 30, 2020, CSMC agreed to discontinue

the ongoing Phase 2b investigator-sponsored clinical study of SYN-010 following the results of a planned interim futility analysis.

Although it was concluded that SYN-010 was well tolerated, it was also concluded that SYN-010 is unlikely to meet its primary endpoint

by the time enrollment is completed.

As a result, the Company anticipates additional reductions in clinical development expense

during the remainder of 2020 due to the discontinuation of this clinical study.

We anticipate our current cash

will allow us to cover overhead costs, manufacturing costs for clinical supply, commercial scale up costs and limited research

efforts, including completing our funding requirements for the initiation of the Phase 1b/2a SYN-004 (ribaxamase) clinical trial

and the planned Phase 1 single ascending dose (SAD) study of SYN-020.

Due to the unique challenges posed by the global COVID-19

pandemic, we have determined that postponing the commencement of the planned Phase 1b/2a clinical study of SYN-004 (ribaxamase)

in allogeneic HCT recipients until the first quarter of 2021 remains the appropriate response to the novel coronavirus pandemic.

We do not anticipate any additional expense related to the Phase 1b/2a SYN-004 (ribaxamase) clinical trial until the trial is cleared

for commencement by Washington University.

Commencement of a future Phase 3 clinical trial of SYN-004 remains subject to our successful

pursuit of opportunities that will allow us to establish the clinical infrastructure and financial resources necessary to successfully

initiate and complete our plan.

We will be required to obtain additional funding in order to continue the development of our current

product candidates beyond our planned Phase 1b/2a clinical study of SYN-004 in allogeneic HCT recipients, the planned Phase 1 SAD

study of SYN-020 in healthy volunteers within the anticipated time periods, if at all, and to continue to fund operations at the

current cash expenditure levels.

Currently, we do not have commitments from any third parties to provide us with capital.

fail to obtain additional funding for our clinical trials, whether through the sale of securities or a partner or collaborator,

and otherwise when needed, we will not be able to fully execute our business plan as planned and we will be forced to cease certain

development activities until funding is received and our business will suffer, which would have a material adverse effect on our

financial position, results of operations and cash flows.

While we are experiencing limited financial

impacts at this time, given the global economic slowdown, the overall disruption of global healthcare systems and the other risks

and uncertainties associated with the COVID-19 pandemic, including uncertainty regarding our clinical timelines, our business,

With the exception of the three months ended June 30,

2010 and the three months ended December 31, 2017, we have experienced significant losses since inception, incurred negative cash

flows from operations, and have a significant accumulated deficit.

We have incurred an accumulated deficit of $259.6 million as of March 31,

2021 and expect to continue to incur losses in the foreseeable future.

Our cash and cash equivalents totaled $76.9 million

as of March 31, 2021, an increase of $70.6 million from December 31, 2020.

During the three months ended March 31,

2021, the primary use of cash was for working capital requirements and operating activities which resulted in a net loss of $2.5 million

for the three months ended March 31, 2021.

During the three months ended March 31, 2021, we raised approximately $74.0 million from

cash received via the exercise of approximately 65% of the 2018 Warrants and sales of our common stock in “at the market offerings

pursuant to the Sales Agreement that we had entered into in 2016 with FBR Capital Markets & Co.

(now known as B.

Riley Securities)

(the “Original ATM Sales Agreement”) and the Amended and Restated ATM Sales Agreement.

At March 31, 2021 our cash position

was $76.9 million, which we believe will be sufficient to fund our operations through at least the end of the first quarter of 2023.

As a result of the global COVID-19 pandemic, our

clinical development partner (Washington University) reduced their operating capacity during 2020 and 2021 to include only essential activities

as part of their pandemic response.

These delays impacted the timelines for our clinical programs, which included delaying commencement

of the Phase 1b/2a clinical trial of SYN-004 until the second quarter of 2021.

These delays also resulted in a decrease in expenses as

no clinical trials had yet commenced during that period.

If enrollment in our ongoing Phase 1b/2a clinical trial being conducted by Washington

University is halted due to COVID-19 developments, we may experience reduced expenses until such time as enrollment resumes.

Although we are experiencing limited, if any,

adverse impact to our financial stability stemming from the global economic slowdown, the overall disruption of global healthcare systems

and other risks and uncertainties associated with the COVID-19 pandemic, including uncertainty regarding our clinical timelines, our business,

financial condition, results of operations and growth prospects could be materially adversely affected.

Historically, we have financed our operations

primarily through public and private sales of our securities, and we expect to continue to seek to obtain our required capital

in a similar manner.

During the year ended December 31, 2019 and the nine months ended September 30, 2020, we did not engage in

any financing activity as our financings conducted during the year ended December 31, 2018 were sufficient to satisfy our cash

needs during 2019 and the nine months ended September 30, 2020.

During the year ended December 31, 2018, our only sources of funding

were from our underwritten public offering (the “Offering”) described below pursuant to which we received net proceeds

of approximately $16.7 million and sales of 3.5 million shares of our Common Stock in our at-the-market offering program through

the FBR Sales Agreement pursuant to which we received net proceeds of approximately $12.2 million.

The FBR Sales Agreement enables

us to offer and sell shares of our Common Stock from time to time through FBR Capital Markets & Co.

as our sales agent, provided

that we meet certain conditions.

Sales of Common Stock under the FBR Sales Agreement are made in sales deemed to be “at-the-market”

equity offerings as defined in Rule 415 promulgated under the Securities Act.

FBR Capital Markets & Co.

is entitled to receive

a commission rate of up to 3.0% of gross sales in connection with the sale of our Common Stock sold on our behalf.

On October 15, 2018, we closed the Offering

pursuant to which we received gross proceeds of approximately $18.6 million before deducting underwriting discounts, commissions

and other offering expenses payable by us and sold an aggregate of (i) 2,520,000 Class A Units (the “Class A Units”),

with each Class A Unit consisting of one share of Common Stock, and one five-year warrant to purchase one share of Common Stock

at an exercise price of $1.38 per share (the “October 2018 Warrants”), with each Class A Unit offered to the public

at a public offering price of $1.15, and (ii) 15,723 Class B Units (the “Class B Units), with each Class B Unit offered to

the public at a public offering price of $1,000 per Class B Unit and consisting of one share of our Series B Convertible Preferred

Stock (the “Series B Preferred Stock”), with a stated value of $1,000 and convertible into shares of Common Stock at

the stated value divided by a conversion price of $1.15 per share, with all shares of Series B Preferred Stock convertible into

an aggregate of 13,672,173 shares of Common Stock, and issued with an aggregate of 13,672,173 October 2018 Warrants.

A.G.P./Alliance

Global Partners (the “Underwriters”) acted as sole book-running manager for the Offering.

In addition, pursuant to

the Underwriting Agreement that we entered into with the Underwriters on October 10, 2018, we granted the Underwriters a 45 day

option (the “Over-allotment Option”) to purchase up to an additional 2,428,825 shares of Common Stock and/or additional

October 2018 Warrants to purchase an additional 2,428,825 shares of Common Stock.

The Underwriters partially exercised the Over-allotment

Option by electing to purchase from us additional October 2018 Warrants to purchase 1,807,826 shares of Common Stock.

were offered by us pursuant to a registration statement on Form S-1 (File No.

333-227400), as amended, filed with the

SEC, which was declared effective by the SEC on October 10, 2018.

As of December 31, 2019, 8,085 shares of Series B Preferred Stock

have been converted to Common Stock and 7,638 shares of Series B Preferred Stock remain outstanding.

We have spent, and expect to continue to

spend, a substantial amount of funds in connection with implementing our business strategy, including our planned product development

efforts, preparation for our planned clinical trials, performance of clinical trials and our research and discovery efforts.

on our current plans, our cash and cash equivalents will not be sufficient to enable us to meet our long-term expected plans as

it is anticipated that we will not have enough cash to continue our operations beyond the next twelve months.

We will be required

to obtain additional funding in order to continue the development of certain product candidates within the anticipated time periods,

if at all, and to continue to fund operations at the current cash expenditure levels.

Our ability to continue as a going concern

is dependent upon our ability to raise additional capital.

Our cash and cash equivalents will not be sufficient to enable us to

meet our long-term expected plans, including initiation or completion of a future potential Phase 3 clinical program of SYN-004

(ribaxamase) for prevention of CDI and/or the prevention of aGVHD in allogeneic HCT recipients, or later-stage clinical trials

Therefore, we do not intend to commence future Phase 3 clinical programs of SYN-004 (ribaxamase) for prevention of

CDI and/or the prevention of aGVHD in allogeneic HCT recipients, or later-stage clinical trials of SYN-020 until we are confident

that we have funding necessary to complete such trials.

We are actively pursuing additional equity or debt financing, in the form

of either a private placement or a public offering and have been in ongoing discussions with strategic institutional investors

and investment banks with respect to such possible offerings.

However, we do not currently have commitments from any third parties

to provide us with capital.

Potential sources of financing that we are pursuing include strategic relationships, public or private

sales of our equity (including through the FBR Sales Agreement) or debt and other sources.

Such additional financing opportunities

might not be available to the Company when and if needed, on acceptable terms or at all.

We cannot assure that we will meet the

requirements for use of the FBR Sales Agreement especially in light of the fact that we are currently limited by rules of the SEC

as to the number of shares of Common Stock that we can sell pursuant to the FBR Sales Agreement due to the market value of our

Common Stock held by non-affiliates.

Even if we meet the requirements for use of the FBR Sales Agreement, there can be no assurance

that we will be able to continue to raise funds through the sale of shares of Common Stock through the FBR Sales Agreement.

Additionally,

we may seek to access the public or private equity markets when conditions are favorable due to our long-term capital requirements.

If we are unable to obtain additional capital (which is not assured at this time), our long-term business plan may not be accomplished

and we may be forced to cease certain development activities.

More specifically, the completion of future Phase 3 and/or registrational

clinical studies will require significant financing or a significant partnership.

primarily through public and private sales of our securities, and we expect to continue to seek and obtain additional capital in a similar

During the year ended December 31, 2020, our only source of financing was from sales of 9.2 million shares of our common

stock utilizing our at-the-market offering program through the Original ATM Sales Agreement pursuant to which we received net proceeds

of approximately $3.4 million.

During the three months ended March 31, 2021, we received proceeds of approximately $8.0 million from the

cash exercise of approximately 11.6 million of our 2018 warrants and sold approximately 78.7 million shares of our common stock for net

proceeds of approximately $66.0 million pursuant to the Original ATM Sales Agreement and the Amended and Restated ATM Sales Agreement.

The Amended and Restated ATM Sales Agreement enables

us to offer and sell shares of our common stock from time to time through B Riley and AGP as our sales agents.

Sales of common stock under

the Amended and Restated ATM Sales Agreement are made in sales deemed to be an “at the market offering” as defined in Rule 415

promulgated under the Securities Act.

B Riley and AGP are entitled to receive a commission rate of up to 3.0% of gross sales in connection

with the sale of our common stock sold on our behalf.

There can be no assurance that we will be able to continue to raise funds through

the sale of shares of common stock through the Amended and Restated ATM Sales Agreement.

If we raise funds by selling additional shares

of Common Stock or other securities convertible into Common Stock, the ownership interest of our existing stockholders will be

If we are not able to obtain funding for future clinical trials when needed, we will be unable to carry out our business

plan and we will be forced to delay the initiation of future clinical trials until such time as we obtain adequate financing and

our operating results and prospects will be adversely affected.

Following the completion of our planned

Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients and planned Phase 1 SAD study of SYN-020, we will

need to obtain additional funds for future clinical trials.

We anticipate that our future clinical trials will be much larger in

size and require larger cash expenditures than the current planned Phase 1b/2a clinical trial of SYN-004 (ribaxamase) to be conducted

by Washington University and Phase 1 SAD study of SYN-020 IAP.

of common stock or other securities convertible into common stock, the ownership interest of our existing stockholders will be diluted.

If we are not able to obtain funding for future clinical trials when needed, we will be unable to carry out our business plan and we will

be forced to delay the initiation of future clinical trials until such time as we obtain adequate financing.

We have committed, and expect to continue to commit,

substantial capital in order to implement our business strategy, including our planned product development efforts, preparation for our

planned clinical trials, and performance of clinical trials and our research and discovery efforts.

We believe our cash position of $76.9.

million as of March 31, 2021 is sufficient to fund our operations through at least the end of the first quarter of 2023, including

continuation of our ongoing Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients for the prevention of aGVHD,

as well as our ongoing Phase 1 SAD study and planned Phase 1 MAD study and Phase 2 clinical programs for SYN-020.

Following the anticipated completion of our ongoing

Phase 1b/2a clinical study of SYN-004 (ribaxamase) in allogeneic HCT recipients, the ongoing Phase 1 SAD and planned MAD studies and planned

Phase 2a clinical trial of SYN-020, we may need to obtain additional funds for future clinical trials, the amount of which will depend

upon the trial size and number of clinical sites.

We anticipate that our future clinical trials will be much larger in size and require

larger cash expenditures than the aforementioned clinical programs.

We do not have any committed sources of financing for future clinical

1 unchanged sentence

to us, or at all.

On January 30, 2020, the World Health Organization

(WHO) announced a global health emergency because of a new strain of coronavirus originating in Wuhan, China (the COVID-19 outbreak)

and the risks to the international community as the virus spreads globally beyond its point of origin.

In March 2020, the WHO classified

the COVID-19 outbreak as a pandemic, based on the rapid increase in exposure globally.

As the COVID-19 coronavirus continues to

spread around the globe, we have experienced disruptions that impact our business and clinical trials, including halting the enrollment

of new patients in our ongoing Phase 2b investigator-sponsored clinical trial of SYN-010 clinical study and postponement of clinical

site initiation of the Phase 1b/2a clinical trial of SYN-004.

The full impact of the COVID-19 outbreak continues to evolve as of

the date of this report.

As such, it is uncertain as to the full magnitude that the pandemic will have on our financial condition,

liquidity, and future results of operations.

We are actively monitoring the global situation and its potential impact on our financial

condition, liquidity, operations, suppliers, industry, and workforce.

Given the daily evolution of the COVID-19 outbreak and the

global responses to curb its spread, we are not able to estimate the future effects of the COVID-19 outbreak on our results of

operations, financial condition, or liquidity.

spread around the globe, we have experienced disruptions that impacted our business and clinical trials, including postponement of

commencement of the now ongoing Phase 1b/2a clinical trial of SYN-004.

The full impact of the COVID-19 outbreak continues to evolve

as of the date of this report.

As such, it is uncertain as to the full magnitude that the pandemic will have on our financial

condition, liquidity, and future results of operations.

We are actively monitoring the global situation and its potential impact on

our financial condition, liquidity, operations, suppliers, industry, and workforce.

Given the daily evolution of the COVID-19

outbreak and the global responses to curb its spread, we are not able to estimate the future effects of the COVID-19 outbreak on our

results of operations, financial condition, or liquidity.

Off-Balance Sheet Arrangements

During the three and nine months ended

September 30, 2020, we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

During the three months ended March 31, 2021,

we did not have, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

Contractual Obligations

At the inception of a contract we determine

if the arrangement is, or contains, a lease.

Right-of-use (“ROU”) assets represent our right to use an underlying asset

for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and

liabilities are recognized at the commencement date based on the present value of lease payments over the lease term.

We have made certain accounting policy

elections whereby we (i) do not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months

or less) and (ii) combine lease and non-lease elements of our operating leases.

ROU assets are included in other noncurrent assets

and lease liabilities are included in other current and non-current liabilities in our condensed consolidated balance sheets.

of September 30, 2020, we did not have any material finance leases.

At the inception of a contract we determine if

the arrangement is, or contains, a lease.

Right-of-use (“ROU”) assets represent our right to use an underlying asset for the

lease term and lease liabilities represent our obligation to make lease payments arising from the lease.

ROU assets and liabilities are

recognized at the commencement date based on the present value of lease payments over the lease term.

We have made certain accounting policy elections

whereby we (i) do not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12-months or less)

and (ii) combine lease and non-lease elements of our operating leases.

ROU assets are included in other noncurrent assets and lease liabilities

are included in other current and non-current liabilities in our condensed consolidated balance sheets.

As of March 31, 2021, we did not

have any material finance leases.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis